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Eric Cantor loses primary

thaiboxerken said:
It shows how pathetic the GOP is when Cantor is considered not Conservative enough to hold office......
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Yes. I was quite startled when I heard of Cantor's defeat. I always thought of him as an ultra-conservative dick. Now, don't know whether to rejoice that a Democrat will take his place or fear that he'll be replaced by someone even more intransigent.
 
Francesca R said:
The "elephant in the room" with lower tax and spending is that while it may be net expansionary due to what you mention it is also typically income-regressive (relative to no change), which is an issue many care about, apparently more on the left than the right of centre.

But this is not always and everywhere true, a lot of tax-spend policies could be removed to a net neutral or progressive impact.
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I have long advocated a cut in the wage tax which is a hugely regressive, work-discouraging tax. For our non-American friends, workers pay a tax to the Social Security fund of 6.2% on the first $110K of wages (the cap is indexed to CPI I believe) and a tax for Medicare of 1.45% on all wage income. Their employer contributes the same (although this tax is deductible from their own income taxes). For self-employed people (like me) the combined tax is 15.3% on all business income up to $110K and then 2.9% thereafter. There is now also an additional 0.9% tax on all wages above $200K (or $250K for married filing jointly) thanks to Obamacare.
 
But if you don't replace the lost social insurance revenue elsewhere and therefore cut that, I am not sure such a policy is progressive overall.
 
Francesca R said:
Oh, that isn't good no. In fact the US performs worse on public debt (OECD projections, general government gross/net liabilities Annex table 32-33) than the UK even without its austerity.
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Yes. OTOH UK projections of real GDP growth exceed US. Interesting that German GDP projections are intermediate and their debt load is pretty constant. What did they do right ?

But the other thing is that the UK's austerity hasn't actually been particularly more effective, in the sense of not narrowing the general government's deficit by anything like as much as was originally projected (data in the same annex tables). The reason for that is that by killing growth, fiscal tightening can have a self-defeating effect.
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Agreed - in recession some form of deficit generating stimulus seems warranted. But the question of when spending or revenue reduction should cease arises. The Krugmanites want 24x7 access to the punch bowl until the "good old days" return even now, 7 years later ! This seems to ignore we likely have just seen a fundamental changes in global competition and trade; a shift of regimes and not just a a deep business cycle.

Here at least boomers are leaving the workforce despite being under nominal retirement age, manufacturing jobs are largely gone and still in decline in some fields. And construction is way off. Smaller tax base and increasing government non-discretionary spending for social programs. Bank capital for small business is hard to come by and regulation increasing. That's not a pretty picture.


Bottom line--this isn't actually easy to do with spending cuts or tax rises.
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Well tax increases are certainly self-defeating, and spending cuts less harmful and nearly impossible given the increased social burdens of a recession. That points to growth as the potential "out". Compounded with the ignorance of the population and political demagoguing of the issue - good policies are nearly impossible.
 
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stevea said:
<snip>

It is a problem that TP is not a centrally organized faction with a well stated position. It allows opponents to scape-goat and demonize in the most outrageous and unfair ways.
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Good analysis. I think the accusations of racism against the TP are mostly strategic posturing, but there are some who honestly believe that the TP only arose in response to the election of our first black President. Of course, I view the timing of the TP's rise as coincidental.

In the spring of 2009, there was a sense of despair among smaller government types as it looked like liberalism was on a roll. Not only did we have a new, very liberal President, but he had charisma, the support of the media, and huge majorities in the House and Senate to work with. In fact, the Senate majority looked like it would be (and indeed became) filibuster-proof with the resolution of Al Franken's Senate race. The stimulus bill, which passed with almost no Republican support showed that the nation's conservatives were powerless in the face of the liberal onslaught. Bailouts for underwater mortgagors were being bruited about, as well as even the rewriting of contracts. And then came the next big item on the liberals' to-do list: a remaking of our health care insurance system.

Scary times, but it had nothing to do with the color of Obama's skin. There is no question in my mind that the Tea Party would go ga-ga over a charismatic small government conservative, regardless of their skin color. In fact, they did, and do.
 
Francesca R said:
But if you don't replace the lost social insurance revenue elsewhere and therefore cut that, I am not sure such a policy is progressive overall.
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Under a fiat currency system, taxes are not for raising revenue. They are for removing excess demand to curb inflation. We should keep lowering taxes until demand picks up. Obama's tax hikes were precisely the wrong prescription for the economy, and I am not surprised that we're still staggering along with subpar growth and high unemployment.
 
stevea said:
Yes. OTOH UK projections of real GDP growth exceed US. Interesting that German GDP projections are intermediate and their debt load is pretty constant. What did they do right ?
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Basicaly not allow certian things to happen in the first place. Their underlying economy was more robust and less dependent on housing and banking.

In effect they were in a position to stimulate their economy simply but not cutting spending or raising taxes.

They also largely managed to bail out their banks through proxy (proping up greece) rather than dirrectly.
 
sunmaster14 said:
taxes are not for raising revenue. They are for removing excess demand to curb inflation.
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If you're a Keynsian. Most countries use central banks.

They are also for providing public goods, and handy for the redistribution of income. Both of which are nothing to do with inflation or demand management at all. Of course if you don't want to do either of those things, then you don't actually need taxes.
 
stevea said:
Agreed - in recession some form of deficit generating stimulus seems warranted. But the question of when spending or revenue reduction should cease arises.
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Oh I agree. The US was already recovering faster than the UK before the UK started taxing and cutting. It is very hard to make a case stick that the US should still be running non-cyclical deficits today, or not at least reducing them significantly.
 
Francesca R said:
The "elephant in the room" with lower tax and spending is that while it may be net expansionary due to what you mention it is also typically income-regressive (relative to no change), which is an issue many care about, apparently more on the left than the right of centre.

But this is not always and everywhere true, a lot of tax-spend policies could be removed to a net neutral or progressive impact.
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Peculiar backtrack there since I suggested no specific form of tax reduction.

But what form of tax reduction policy would you expect would be the most expansionary - regressive or progressive ?


sunmaster14 said:
I have long advocated a cut in the wage tax which is a hugely regressive, work-discouraging tax. For our non-American friends, workers pay a tax to the Social Security fund of 6.2% on the first $110K of wages (the cap is indexed to CPI I believe) and a tax for Medicare of 1.45% on all wage income. Their employer contributes the same (although this tax is deductible from their own income taxes). For self-employed people (like me) the combined tax is 15.3% on all business income up to $110K and then 2.9% thereafter. There is now also an additional 0.9% tax on all wages above $200K (or $250K for married filing jointly) thanks to Obamacare.
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Why do you advocate this sort of cut ?

The entire point in recession is to stimulate expansion of the economy - not for social do-gooderism or personal benefit. So do we get more expansion by giving every worker an extra $100/month or distributing the same $10B/mo toward capital formation ?

A large part of recession is lack of confidence causing ppl to spend more reluctantly. Does an improved job market & job prospects resulting from capital formation improve confidence for LT investments like a home more or less than a temporary tax reduction of a minor amount ?
 
stevea said:
Peculiar backtrack there since I suggested no specific form of tax reduction.
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Didn't say you did but it is the elephant in the room of shrinking the state.

But what form of tax reduction policy would you expect would be the most expansionary - regressive or progressive ?
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I don't know plus I don't think there is a consensus. Regressive tax cuts IE tax cuts for the rich tend to stimulate investment relative to consumption by more than progressive ones which tend to stimulate consumption (relative to investment). The former by definition stimulates more in the future and the latter more today.

In a recession, some would say we need more growth today--implying that higher consumption trumps higher investment at such times.
 
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sunmaster14 said:
Good analysis. I think the accusations of racism against the TP are mostly strategic posturing, but there are some who honestly believe that the TP only arose in response to the election of our first black President. Of course, I view the timing of the TP's rise as coincidental.

In the spring of 2009, there was a sense of despair among smaller government types as it looked like liberalism was on a roll. Not only did we have a new, very liberal President, but he had charisma, the support of the media, and huge majorities in the House and Senate to work with. In fact, the Senate majority looked like it would be (and indeed became) filibuster-proof with the resolution of Al Franken's Senate race. The stimulus bill, which passed with almost no Republican support showed that the nation's conservatives were powerless in the face of the liberal onslaught. Bailouts for underwater mortgagors were being bruited about, as well as even the rewriting of contracts. And then came the next big item on the liberals' to-do list: a remaking of our health care insurance system.

Scary times, but it had nothing to do with the color of Obama's skin. There is no question in my mind that the Tea Party would go ga-ga over a charismatic small government conservative, regardless of their skin color. In fact, they did, and do.
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Having read many of your posts I've concluded you're clearly a very bright chap. But the above is almost charming in its Bizarro bending of reality.
 
Francesca R said:
If you're a Keynsian. Most countries use central banks.

They are also for providing public goods, and handy for the redistribution of income. Both of which are nothing to do with inflation or demand management at all. Of course if you don't want to do either of those things, then you don't actually need taxes.
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Not a Keynesian. More of a neochartalist. I follow this guy, although he's a tad nutty and more liberal and less libertarian than I would like.

And central banks set the short rate, and that is it. Which, when it comes to affecting aggregate demand, is a little like turning a knob with a rubber band attached to a string.
 
Regnad Kcin said:
Having read many of your posts I've concluded you're clearly a very bright chap. But the above is almost charming in its Bizarro bending of reality.
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Very bright and almost charming. I'm starting to think you're very perceptive Mr. Danger. :D Or is danger your middle name?
 
stevea said:
As compared to the US going dangerously into debt ...
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Can you describe specifically the point at which the US went 'dangerously' into debt? You are aware, aren't you, that in the last 67 years only 12 times has the US posted a budget surplus? Indeed, for 28 consecutive years the US posted a budget deficit, until the latter part of President Clinton's second term where the US finally recorded a surplus.

Deficit spending is the American way. It has seemed to have survived it so far. And the costs of servicing that debt are but a small portion of overall US government expenditures.
 
sunmaster14 said:
Good analysis. I think the accusations of racism against the TP are mostly strategic posturing, but there are some who honestly believe that the TP only arose in response to the election of our first black President. Of course, I view the timing of the TP's rise as coincidental.
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How do you distinguish coincidence from reaction?

sunmaster14 said:
In the spring of 2009, there was a sense of despair among smaller government types as it looked like liberalism was on a roll. Not only did we have a new, very liberal President, but he had charisma, the support of the media, and huge majorities in the House and Senate to work with. In fact, the Senate majority looked like it would be (and indeed became) filibuster-proof with the resolution of Al Franken's Senate race. The stimulus bill, which passed with almost no Republican support showed that the nation's conservatives were powerless in the face of the liberal onslaught. Bailouts for underwater mortgagors were being bruited about, as well as even the rewriting of contracts. And then came the next big item on the liberals' to-do list: a remaking of our health care insurance system.
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I have to agree with Regnad Kcin; this is just plain historical revisionism.

Obama never was and has not governed as a "very liberal President". He did not have "huge" majorities in Congress. The Senate, while having 60 Dems, was NEVER filibuster-proof. The Dems could, at most, raise 55 votes to try to break a filibuster. The nation's conservatives were anything but powerless, witness their effect on Obamacare. Bailouts for homeowners might have been mention in liberal blogs but those ideas were never on the table in Washington.

You're ok when you stick to the facts, sunmaster14. You have no need for fairy tales.
 
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